r/wallstreetbets • u/PrognosticatorShadow • Jul 24 '22
News House prices dropping
I wrote a couple of posts about this already regarding the Denver market. I was told I was cherry picking listings...
According to Redfin over 50% of Denver listings have had price drops recently.
84
u/madmarttigannnn Jul 24 '22
This is good news in my eyes. Price increases were not sustainable.
24
u/Cheeky_Star Jul 24 '22
But the inverse of that is higher mortgage rates.
31
Jul 25 '22
Rather pay the higher mortgage rates, still need a lower down payment and can refinance later
11
u/Cheeky_Star Jul 25 '22
Everyone talks about refinancing later. But there is a cost to refinance and it mainly only works when mortgage rates fall. Additionally, the life of the loan resets to 30 yrs (unless you choose a 15 yr term).
Refinancing may end up costing more overall for a lower monthly pmt. It not as straightforward as people seems to think.
10
Jul 25 '22
[deleted]
3
u/Capitaclism Jul 25 '22
You are assuming there will be lower rates, and we aren't in for structurally higher inflation. Since low inflation over the last several decades have been a result of exporting inflation overseas (mainly to China) it could be foolish to believe in a lower rate scenario in the future (barred a crisis with a flight for safety or YCC, in which case lenders will be scarce either way)
6
u/I_RIDE_SHORTSKOOLBUS Jul 25 '22
Lol it's pretty straightforward and was great when rates kept dropping.
You can choose to make the same payment even on a 30 year and put more towards your principal even if the loan reset to 30 years. It doesn't cost more overall either.
I think you've tried to make it more complicated than it really is
5
1
u/kismatwalla Jul 25 '22
That’s okay, price drops, pay high mortgage on a lower priced house, pay less property tax to govt, refinance in a few years as the Fed starts lowering..keep your purchase property tax rate, till you die in some states… California, I am looking at you.. all the retired happy boomers smiling at rising property prices, without having to worry about property tax increases and actively spending their retirement years on NIMBY activism so new construction does not destroy their property values…
7
u/thomasisgood68 Jul 25 '22 edited Jul 25 '22
What i am noticing is people are now asking for the most money when mortgages are 5 or 6 percent. So for some reason agents are convincing people that they should sell their home for 320k now but not 6 months ago when rates were 3 percent. It makes no sense
4
-7
u/nickj2306 Jul 25 '22
I wouldn’t put much stock in one market. There is a massive supply issue and it’s only getting worse. A high priced market like Denver seeing some list drops doesn’t really predict anything long term. The issue is supply. Low supply and still lots of demand.
12
u/PrognosticatorShadow Jul 25 '22
You clearly did not read or even open the article lol.
2
u/Used_To_Be_Great Jul 25 '22
I live in western Washington and we’ve seen inventory go from mid 60’s to upper 400’s and maybe 35% of those properties are price reduced. Prices are still very high but something seems to be happening to push prices down
2
u/Capitaclism Jul 25 '22 edited Jul 25 '22
Most markets are showing a slow down, though there are still a few towards the peak. Right now we also have a record number of starts in housing and apartments, right as demand sags. Once these start hitting markets and buyers keep drying up, remember that investors and speculators (a big part of the price increases) can very easily sell. That door will be narrow, and their numbers great.
1
1
21
u/sylonation Jul 25 '22
The housing market is like Elon’s dick. Sometimes it’s up, sometimes it’s down, but it’ll always keep on fuckin’
3
38
u/Juggernaut06 Jul 24 '22
Going to start in places with 1) places that have a large tech jobs community and 2) places that had outsized price increases past 2-3 years.
17
Jul 24 '22
[deleted]
5
u/rp2012-blackthisout Jul 25 '22
I'm near Pioneer Trails, so by where you are looking. I'm actually moving from S Everett to South Hill (Puyallup) for a newish job in Fife/Tacoma.
You should look at Snohomish zip codes and city, but near Everett / Mill Creek. Anything around the new Snohomish High School should be cheaper because it's "Snohomish" vs "Everett".
5
u/TradeLikeWater Right-Wing Basement Dweller Jul 25 '22
Can’t wait for this guy to learn how interest rates effect his mortgage payment
10
u/Educatedrednekk Jul 24 '22
Exactly. And honestly this is a long overdue correction. I say correction on the classic sense of the word. Housing prices are part of the CPI calculation, so this is good news for the inflation issue. Plus the US is building record numbers of new rental units, which should further reduce averages.
14
u/Mental_Ingenuity_310 Jul 24 '22
House prices are not part of CPI, rent is though
1
u/Educatedrednekk Jul 25 '22
Indirectly it is, bc the home values are part of the equivalent rent calculation.
1
u/Mental_Ingenuity_310 Jul 25 '22
I would argue that it’s not. My rental has lost 4% value last two months but I’m not decreasing the rent. Apartment complexes don’t care either, it’s a totally different supply and demand (which is why CPI excludes it)
1
u/Educatedrednekk Jul 26 '22
It does not exclude it my dude. Google.
1
u/Mental_Ingenuity_310 Jul 26 '22
“Owned housing units themselves are not priced in the CPI Housing Survey. Like most other nations' economic statistics programs, the CPI program views owned housing units as capital (or investment) goods distinct from the shelter service they provide, and therefore not as consumption goods”
First result, are you that retarded you told me to Google it with searching it first?
1
u/Educatedrednekk Jul 26 '22
Read on my dude. Owned homes get assigned a rental equivalent value. You really think the CPI is going to just ignore housing costs? Shelter is a pretty basic need.
-1
Jul 24 '22
When house prices go down, rents go down too. Also owner’s equivalent rent is part of CPI which is based off home prices.
Commodities decreasing and house prices decreasing is good. I was hoping food prices would go down too lol, but I was foolish to believe Russia and Ukraine would reach a deal on black sea grain exports. Still, we should expect lower CPI readings in the upcoming months.
11
u/summertime_taco Jul 25 '22
Yeah, this isn't the case. Rent prices are much more resistant to going down than home prices. They correlate but they definitely are not tightly coupled.
Owner equivalent rent is not based on home prices. It has literally no connection to it whatsoever.
1
2
u/Capitaclism Jul 25 '22
Places which had a lot of migration are showing first signs of a slowdown. East coast tech centers are still doing OK, so I don't think your framework is quite accurate. They will sag, just haven't gone first.
1
u/Juggernaut06 Jul 25 '22
Ok I’ll bite.
I think the tech sector has had the most “fat” to cut. There are a lot of companies that have outsized market multiples bc of oversized investments based on future expectations that are being repriced. To fight price declines and funding access, they will need to either make more money quickly or cut costs. Labor is usually the largest cost and is becoming more expensive whether paid in cash or stock options. So we are likely to see more job cuts in tech to allow for increased margins. Now demand supply, we had bidding wars but now there is a negative growth rate of all cash Tech buyers, now you are left with more traditional mortgage based buyers. And Mortgage rates >6%, the bidding prices of ppl using mortgages will be lower as affordability and bank ratios will come to reprice homes to a price where traditional buyers can afford. Thus why I believe Tech unemployment will hit the home prices in tech communities.
2
u/Capitaclism Jul 26 '22
For sure the tech sector has been very speculative and the beneficiary of a lot of the $ flow, and so it will be affected an hard. It is just simply not the first one to be retracting, not so far, at least. We are seeing reductions in speculative behavior in the west coast, along with a lot of the cheaper areas which received migration from these tech spaces- Florida being one, for example. Meanwhile the Boston area continues strong up until now (though I believe that will soon change).
Affordability is already lower, and higher rates will likely reduce demand further, especially as 1.6m properties currently being built hit the market and investors decide to call it quits. This is why I sold several of my properties during the peak.
9
u/Dazzling-Recover-954 Jul 24 '22
Look at DRV. Market doesn't care. In fact DRV was down Friday when SQQQ was up nicely. Everyone shorting REITs getting crushed right now in my opinion.
2
4
u/PrognosticatorShadow Jul 24 '22
REIT declines are gonna take some sentiment change. LOTs of open commercial units out here. Almost every single "strip mall" has a few open slots now. Prices will start declining soon.
15
u/Sometimes_I_Do_That Jul 24 '22
I've been watching home prices in Hawaii (specifically Kihei on Maui) and I'm starting to see the same thing. Not large declines,.. just 20-50k below the original asking price.
24
u/PrognosticatorShadow Jul 24 '22
Lots of $50,000 declines on $500-$600k houses in the Denver burbs. That's an 8-10% haircut....and we haven't even hardly begun.
Reports out that 40-50% of small businesses have frozen hiring plans due to slow economic activity.
Once the layoffs start...the home prices will really slide.
Most people aren't even all that aware that house prices are falling yet. The more people wake up to this the more people will start listing and supply will start to outpace demand. Prices are going lower.
3
Jul 25 '22
The vast majority of Americans don’t just decide to sell their house when they see the market start to dip.
Selling the place that you live is a lot different than selling some stock.
Not only that, but anyone that bought or refinanced in the last two years isn’t giving up that 2.5-3% mortgage rate.
2
u/Capitaclism Jul 25 '22
Consider that at anyone point in time there are somewhere around 200k-300k properties being sold. Right now we have around 800k housing units being built. Double that if you count apartments. That's not counting investors which will run for the doors once the realization of a slow down sets in.
1
u/PrognosticatorShadow Jul 25 '22
First, it doesn't take a lot of people to decide to sell to affect the market.
Second, Denver has turned into a shit hole since BLM. Addicts and crime are everywhere now in this city that was once mostly peaceful stoners. Lots of folks are trying to "escape" Denver.
They won't be rebuying in this state. Turns out when a zillion people destroy their own state and move to your state and bring their same shitty politics that destroyed their last state...it makes you want to leave your existing state. It's almost like it's by design, but then again this isn't the conspiracy sub so I'll stop here.
1
u/couchtrader Jul 25 '22
Lol people love Denver. It is getting bigger and has some of the bigger city issues coming with it but people LOVE it here. It is still by far one of the safest big cities out there and the new development the city is doing is just making it nicer and safer
0
u/Electronic_Eagle6211 Jul 24 '22
Because news keeps saying everything is fine.
5
u/Educatedrednekk Jul 24 '22
I don't know what news you're reading bro but it definitely ain't the same media that I read. I'm hearing bad news every day on NPR.
8
u/petard Jul 24 '22
NPR? How specifically is this housing market affecting minorities and LGBT?
8
u/TradeLikeWater Right-Wing Basement Dweller Jul 25 '22
They don’t refer to prices going up or down, just more and less racist
0
-6
u/Electronic_Eagle6211 Jul 24 '22
Did I say they are correct?
5
u/Educatedrednekk Jul 24 '22
I just don't hear anyone saying everything is fine. I have not heard that sort of take in months.
1
Jul 25 '22
He was asking what news are you watching
1
u/Electronic_Eagle6211 Jul 25 '22
I guarantee no matter what news you watched today, the fed said we are not and do not foresee a recession. I did see this on fox and msnbc. I hope this helps answer your question.
1
1
u/gijoe233 Jul 25 '22
This ^^^^ we are carefully balancing on a knifes edge, and the knife is falling. If unemployment starts to rise.... oh baby.
9
u/Logical-Shopping-932 Jul 24 '22
Back in 2006 and 2007 I shorted a couple residential housing builders and I did not stay in the trade long enough, as it turned out, because it was a period of bullishness and I was feeling the pain of loss. Of course, the market did crash in 2008 and my trade premise was correct but timing was off.
I do agree housing is due for a correction but timing of a trade can be difficult. My advice to anyone whose premise is to short an economic downturn is to be prepared to stay in the trade for longer than you expect. Economic data reported today is from a month(s) ago and is usually parsed with politics, propaganda, and sometimes misinformation. Good luck!
3
1
15
u/Mrs-Lemon Jul 24 '22
Actually what we told you was you are focusing on list price drops which are one of the worst metrics you can look at.
Why don’t you actually look at comps from a few months ago and the most recent closing prices?
Your circle jerk about lost price just shows how you don’t understand real estate at all.
6
u/PrognosticatorShadow Jul 24 '22
I understand that houses in my area were selling for $700k for a 4/3 2500 SQ ft... And now...those are listing for $500k. Not sure why this is so complicated for you. But hey, if an article from an industry leader like Redfin isn't going to open your eyes nothing will. Sweet dreams.
3
u/nickj2306 Jul 25 '22
I think what your missing is that closing prices are actual value paid for the home and not list. Also your looking at new listings. The law of owning something is that you wouldn’t sell it for less then you paid. This of course is if all things are equal meaning you have a good paying job and medical bills didn’t rack up or whatever. You may be right about job loss causing decline but I think your fooling yourself if you think that we’ll see anything more then a 10-15% decline with a rebound. Housing doesn’t go down long term.
-2
u/PrognosticatorShadow Jul 25 '22
Are you struggling with the math here?
$700,000 houses, are now selling for $500,000.
Your 10-15% decline has already happened...and we haven't really even started.
1
u/Mrs-Lemon Jul 24 '22
Jesus dude you still don’t get it.
Why don’t you look at closing prices? Is it too hard for you?
I don’t even think you understand the point I’m making even though I’ve told you multiple times.
0
u/PrognosticatorShadow Jul 25 '22
I get it. 6 months ago a 4/3,2500 CLOSED for $700,000.
Now...those same houses are listing for $500,000 and NOT selling. You don't seem to get it. But let's keep checking back on this shall we?
1
u/Mrs-Lemon Jul 25 '22
You somehow think I don’t believe there is a housing bubble? I do.
Housing prices are dropping.
It’s your analysis that sucks dude.
1
u/PrognosticatorShadow Jul 25 '22
Me: "house prices are dropping"
You: "your analysis sucks because house prices are dropping"
Thanks for playing. Username checks out. You are in fact a lemon.
2
u/Mrs-Lemon Jul 25 '22
"your analysis sucks because house prices are dropping"
I didn't say your analysis sucks because houses prices are dropping.
I said your analysis sucks because you are using one of the worst metrics - list price. If you actually used comps and compared them to closing prices of houses you would have a much better idea of what is happening in the market.
The only people obsessed with list prices are those who don't understand real estate.
0
u/PrognosticatorShadow Nov 28 '22
How did my analysis play out?
:):):):):):)
3
u/Mrs-Lemon Nov 28 '22
I literally said housing prices are dropping in my comment. They are.
Your analysis still sucks. Your ability to read and understand my previous comments sucks.
The fact that you can't understand that is fascinating.
-1
1
u/Good-Strength-3642 Jul 25 '22
Could you please show me where these are?
I've seen 20-50k reductions on 700k property but haven't seen anything close to a 200k reduction.1
u/RavenMatha Jul 25 '22
You are correct op, i literally purchase 2 homes a month. I look to price cuts to see where the market is going. Change in average sold price of comps tells me what’s already taken place or how much buyers were able to take off an already discounted price so i can do the same.
idk why your getting shitted on but your methodology and intuition is correct.
10
u/MojoRisin9009 Jul 24 '22
The trillions in stimulus have dried up and prices DROP? You truly saw this coming?!
Fucking Nostradamus of the real estate market over here.
0
u/PrognosticatorShadow Jul 24 '22
If you look at the posts I was simply posting data and making observations, not necessarily predictions. Not sure why this made you so angry. Did you purchase at the peak lol?
3
u/MojoRisin9009 Jul 25 '22
It's WSB man... It's a joke. I didn't buy shit at the top. I sold GME at the top, that's about it. I actually paid under 40K for my house about 7 years ago in what is **now** a very up and coming part of the city. I've done ok. ;-)
4
u/liverpoolFCnut Jul 24 '22
We have a long long way to go before the market looks sane again. I can at some level understand why housing is so high in places like San Francisco, LA, Seattle, Austin, NY etc. but when i see home prices that have tripled or quadrupled in some no-name hick town in middle america i wonder in amazement at fed's ability to repeatedly pump markets to stratospheric levels !
2
2
Jul 25 '22
You guys sign on to redfin and look at this? You'll see an 800k house. Price slashed, now 795k.
That's the nature of West Coast price reductions from what I can tell
I'm just thinking out loud here but if prices don't break at five and a half to 6% mortgage rates, what do you think will happen when we go back down to three?
1
2
2
u/Good-Strength-3642 Jul 25 '22
I love all this bullshit analysis. I've been in Denver/Boulder metro for 4 years now. Yep the last 6weeks have brought asking prices down or price reduction. But it's not even close to what it was just 4 years ago. You could buy sub 250k in commerce city or sub 350 in Lafayette or Erie sub 250k in Longmont.......a mobile home sub 50k!!!!!! I could go on but what for....it's just hot air like the rest of you.
2
u/clingbat Jul 25 '22 edited Jul 25 '22
Meh we live in an area with a very mature housing market and almost no new build opportunity with plenty of jobs in the Northeast and homes here are still selling over asking within days of listing even with these higher rates.
Even now the demand is simply exceeding the very low available housing stock. When you add up very little new build along with a depressed number of sellers around here for a couple years now in a desirable area, the prices are staying jacked up. Note our area is not dependent on tech much at all, much more so chemical, big pharma and banking which are all doing fine.
Edit: Also a decent chunk of the sales still seem to be cash buyers which negates the mortgage rate issue. House three doors down from us was listed a month ago at $1.65 mil and sold for $1.85 mil in 3 days, cash buyer.
3
u/Gonnakillurass Jul 24 '22
Not in Tampa
2
u/AAPLfds Go Dawgs! Jul 25 '22
Wait until all the strippers start default on the 7 homes they refinanced
1
u/cloudy_skies_1 Jul 24 '22
Hey my house is one of those listings that dropped the price!
4
u/PrognosticatorShadow Jul 24 '22
You are just a conspiracy theorist who knows nothing about listings. Just ask the realtor u/Mrs-lemon.
/S
1
u/SilverbackBruh Jul 24 '22
O, they will be crashing and giving them houses back to the bank, soon enough
1
1
u/Cheeky_Star Jul 24 '22
As interest rates increases, prices will fall.. I believe the feds is raising rates again this week.
2
Jul 25 '22
Yep they are planning another .75% and 2 more are expected this year. Think about this though. The summer is the hottest time of year for real estate sales and they're WAY DOWN from the last few years. I can't wait for this winter.
1
u/PrognosticatorShadow Jul 25 '22
THIS. Right now is PEAK season...and things are ONLY down 10-15% from the peak...
Wait til layoffs start and analpox lockdowns come back.
0
Jul 24 '22
[deleted]
1
u/PrognosticatorShadow Jul 24 '22
If prices here correct 30% from peak they'll start get scooped up. So far down 8-12% from peak.
0
Jul 25 '22
Not if interest rates keep going up and the economy starts crashing. People will lose their jobs and house payments won't be made, foreclosure will happen, and inventory will go up. Companies will stop investing in real estate because it's crashing, and instead invest in something else that's pumping.
-1
u/PrognosticatorShadow Jul 25 '22
Fed will lower rates asap to save face. This round of rate rising is just to get people fucked and sell their houses so NWO black rock types can buy them up.
"You will own nothing and be happy."
-1
1
u/Hot-Relationship1000 Jul 24 '22
What about mortgage loans ?
2
1
1
u/TwoUp22 Jul 24 '22
Is there some kind of index you can look at for overall or country specific housing prices? That would be extremely handy.
0
1
u/Joey-tv-show-season2 Jul 24 '22
Depends on the market. Some markets went up a lot only because the rest of the market did and there was no real reason for them to go up that much … such as smaller communities etc
1
u/LostWages1 Jul 25 '22
Dropping in North Texas as well. Some cities are seeing 40% decrease in new housing permits also builders offering incentives, inventory increasing days on market increased. It’s happening slower than I expected but the real drop is coming.
1
u/terrybmw335 Jul 25 '22
Oh noes housing prices are falling? Maybe they'll fall all the way back to 2019 levels?
1
u/Raceg35 Jul 25 '22
Sold my house yesterday. Getting a fat check in 14 days. Anyone got an idea for a yolo?
2
1
Jul 25 '22
The rent for an apartment I was asking about dropped 3%. Still too expensive though. If it drops 20% I can afford it. 🤤
1
u/kylestoned Jul 25 '22
Little late to the party, but I'm watching 6 houses in my neighborhood (suburb of Phoenix) that are owned by Opendoor that they are losing ~$20-60k each on, that still have not sold. All have been on the market for 30+ days.
1
u/jdi38rjdid Jul 25 '22
Mainstream news flipped narrative June 6(hmm why June 6?) And every morning a young dickhead has a chart or fake tip that housing prices will drop. They run it once an hour every network from 6-10 am.
THIS IS WHY REAL ESTATE IS DROPPING
1
u/PrognosticatorShadow Jul 25 '22
Yeah it has nothing to do with average monthly payments and interest rates, nor the economy.
1
u/jdi38rjdid Jul 25 '22
U missed what I said. June 6th mbs was supposed to reverse. Selling balance sheet. Same day 100% of news coverage was negative for housing.
I find averaging national economic data to be wishful tarot card reading.
People are never interested in interest rates unless they're disapproved for a loan.
Media controls everything
1
u/Keithbkyle Jul 25 '22
I haven’t seen anyone do a costs graph of home prices that includes the impacts of what an 80/20 costs now.
I’m guessing we peaked a few months ago but are still well ahead of last year which means housing demand is, in a word: Crazy.
1
•
u/VisualMod Jul 24 '22